John Restakis is Executive Director of the BC Co-operative Association in Vancouver. By vocation he is a community organizer and popular educator.  Aside from being a sessional instructor in the University of Victoria's new Masters in Community Development he is an international consultant on cooperative development including the Bologna Summer Studies Program with Professor Stefano Zamagni.  His most recent book is, Humanizing the Economy: Co-operatives in the Age of Capital (New Society Publishers, 2010). Here is John's response to What would you like to become more visible in 2011?   You can also Download Becoming Visible  -  the complete collection of 58 essays.  John's essay is a new addition to the collection.

A Social Market

Over the last decade, there has been a welcome shift in economic thinking to take account of the social dimensions of economics, and much of this has been sparked by a broad reaction to neo-liberal views that economics and the marketplace are primarily about the prerogatives of capital and the maximization of profit. The terms “social economy” and “social entrepreneurship” have now entered the vocabulary of academics and activists alike, who are searching for a broader interpretation of what economics looks like when it serves the interests of communities and the totality of human needs, not just those of corporations and capital. What I would like to see in 2011 is an awareness and exploration of a distinct kind of market that responds to, and reflects, the character of the social economy.

Social economy organizations are those that pursue their goals, whether economic or social, on the basis that individuals’ contributions will be reciprocated and the benefits shared. Reciprocity is the economic principle that defines both the activities and the aims of these organizations – whether they are co-operatives, voluntary associations, or conventional non-profits. Their primary purpose is the promotion of collective benefit. Their social product is not just the particular goods or services that they produce, but human solidarity – the predisposition of people in a society to work together around mutual goals. Another name for this is social capital. And, as opposed to the capitalist principle of capital control over labour, reciprocity is the means by which a social interest – whether it takes the form of labour, or citizen groups, or consumers – can exercise control over capital. As a sub division of civil society, the use of reciprocity for economic purposes is what distinguishes the social economy from the private and public sectors.

A mature social economy requires a corresponding social market. What then, does a social market look like, especially in the context of social care? Five factors seem essential.

The first entails shifting the production of many social care services from government to democratically structured civil institutions. The primary role of government would remain the public funding of these services and establishing the rules for their delivery. And whereas government provides for access to these services its role in producing them would diminish.

Second, government funding should, at least in part, flow directly to social care recipients who would then select the services they need from accredited organizations of their choice. To qualify for receipt of public funds, these organizations must have provisions for user control in their operations. Social services must be democratized.

Third, social care organizations must have the legal ability to raise capital from among their users and from civil society generally on the basis of social investing. Users of a social service organization and community members should be able to purchase capital shares for the purpose of capitalizing the organization. As social investments these capital assets would not be taxed as income. Social capitalization also requires the creation of a social market exchange based on the principle of reciprocity. Individual investors would purchase shares yielding a limited return, with the capital being used to provide credit and investment capital to social economy organizations. Shares would also be eligible for tax credits on the basis that such investments have a clear and direct social benefit. A social stock exchange such as that established in Milan is one model.

Fourth, any surpluses generated by these organizations should be considered as social assets. Social care organizations using public funds would establish an indivisible reserve for the expansion and development of that organization and its services. A portion of operational surplus would also have to be used for the partial capitalization of the social market exchange through the purchase of shares.

Finally, while the primary role of government would be to continue to provide public funds for social care services and to fix the rules of the game, the locus of service design and the designation of service needs would take place, as much as possible, at the community and regional level of delivery. Most importantly, this decentralization of service delivery must include the democratization of decision-making through the sharing of control rights with service users and caregivers.

These provisions are obviously not exhaustive. They do however outline a direction for the considered development of a social market structure that is focused on the social and economic realities of the goods and services it is meant to facilitate, while simultaneously reducing the dependence of such service organizations, and the social economy as a whole, on the state.

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Related Post: The Worth of a Smile – Reciprocity and Stefano Zamagni

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